Is It Fair for Employers to Deduct Their PF and Gratuity Contributions from My Salary?

My employer is telling me that my CTC amount is inclusive of the employer's contribution to Gratuity and PF. Therefore, they are deducting both the employer and employee contributions towards PF and Gratuity from my salary. Please guide whether the employer can deduct the employer's contribution to PF from the employee's salary.

Employer is not in a position to deduct his own share of EPF contribution from the salary of the employee. Similarly, gratuity, being the responsibility of the employer alone, he is not supposed to recover it from the employee.

Under CTC terms, all costs that the employer incurs due to your employment are taken as salary. However, it will not have any legal validity. Therefore, in the payslips, no share of the employer like ESI, PF, Gratuity, should be shown.

Regards,

Madhu.T.K

Dear Sir,

As you said, "Employer is not in a position to deduct his own share of EPF contribution from the salary of the employee. Similarly, gratuity being the responsibility of the employer alone, he is not supposed to recover it from the employee." However, my employer has been deducting both EPF and Gratuity from my salary for the last two years.

If I pursue this legally, can I get back the deducted amount? If yes, please guide me through the legal process. Nearly 20,000 employees are facing the same issue.

I have attached my Offer Letter and Payslip for your reference. Please note: Do not disclose these letters or the company name.

In your offer letter, the company has not offered any salary but has only mentioned that by appointing you, the company would cost a certain amount annually. The wording does not mention salary. Before accepting such an offer, you should have asked and confirmed what your monthly "salary" would be. Similarly, in the payslip, the employer's contribution towards PF and monthly gratuity are not provided. Therefore, there is no illegality to fight against the employer.

However, the practice of offering salary indirectly by displaying CTC needs to be changed, and this requires an initiative. Legal action may not be viable in the absence of any wrongful deductions such as deductions for gratuity and the employer's share of EPF/ESI contributions. The only valid argument would be that you were not offered any salary in the appointment order.

Regards, Madhu.T.K

Dear Babu,

This was a confidential document of the company, and uploading it over the net is not an ethical practice. The CTC (Cost to Company) includes the employer's contribution towards PF/ESI but not the Gratuity.

It is also questionable how the company offers gratuity in the monthly breakup and includes it in the CTC (which is not correct). Additionally, how do they include the Executive Allowance in the Salary Slip when it is not offered to the employee in the offer letter? It seems that the company is hiding something.

Regards,
Pankaj Chandan

Dear All,

Employers don't have the right to deduct EPF, Gratuity, and ESI from an employee's CTC towards employer contributions. However, it should be legal.

Regards,
Charvaka Reddy